14 June 2015

From box to cloud

Six critical success factors can help software companies make the move from selling packaged products to offering online subscriptions and services.

Cloud computing is moving closer to the center of executives’ strategy discussions. Concerns about security and decision rights remain, but faster processing speeds, better network connections, the ubiquity of mobile devices and big data, and other technological advances are making it more appealing for companies in all industries to purchase their software as a service (SaaS) rather than buy it in a box. Under the SaaS model, companies access critical applications directly from central off-site servers; data capacity in the cloud is elastic, so companies can scale up or ramp down applications quickly, and they pay only for what they need. System upgrades happen automatically, so companies’ applications become less costly and onerous to maintain.

As a result, some software providers are looking at adopting cloud-based delivery models for some or all of their offerings. According to International Data Corporation (IDC), the worldwide market for cloud-based SaaS offerings is expected to expand by about 20 percent per year through 2018, when it could exceed the $100 billion mark.